Speaking at the Mortgage Business Expo, Sheila Nicoll, director of conduct policy at the FSA, said: “We are aware there have been some unhelpful rumours circulating claiming that as a result of lenders being responsible for assessing affordability, which has always been the case, intermediaries will be nothing more than lead generators. That is absolutely not our view and we continue to see a very important role for the intermediary in the UK mortgage market.”
“We are concerned about blurring the line about who is responsible for assessing affordability and the extent to which having detailed requirements for assessing affordability for intermediaries would risk doing this.
“We understand that the intermediary at the point of sale will need some degree of comfort about whether the lender will agree the mortgage. Our view is that intermediaries do have a role to play in assessing affordability, but we are considering that it should be limited to checking whether the borrower fits within the expected parameters of lenders’ affordability criteria.”
Nicoll invited brokers to tell the FSA their thoughts about this approach during the consultation period, which will follow the distribution paper’s publication sometime in November.
Nicoll also revealed that all mortgage sellers will be required to have a level 3 qualification regardless of whether they are doing advised or non-advised sales.
She also revealed further details on how the FSA plans to assess brokers applying for approved person status under the new regime next year. She sought to reassure brokers that all applications would be assessed on their own merits.
She said: “The key thing is we will treat non-disclosure very seriously indeed. If there is something we need to know, you need to tell us.”
On the subject of disclosing criminal convictions, Nicoll said approval would “clearly depend on the nature of the crime”.
Other details to be published in the MMR paper this month include the proposal to remove the need for an Initial Disclosure Document in favour of clear and concise disclosure of key information to consumers.
Nicoll also said the FSA did not intend to change the content of the Key Facts Illustration document but there were proposals to assess the triggers for showing the KFI to the consumer.
She confirmed that suitability letters would not be made compulsory and also said the FSA would be holding MMR roadshows open to intermediaries only throughout the UK in December and January.
Nicoll added: “We will not rush into changes without considering the impact they will have on the market. We want to return to commonsense standards.”
